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Pensions: DC trustee agenda update - December 2023

Welcome to our monthly update on current legal issues for trustees of DC pension schemes, designed to help you stay up to date with key developments between trustee meetings, and to support the legal update item on your next trustee agenda. We have a separate update for DB/hybrid schemes.

Autumn statement NEW

The Chancellor made a number of pensions-related announcements in his Autumn Statement and supporting documents (read more), with potentially significant long-term impacts for the industry.

The documents published included responses to consultations on (i) DC decumulation, confirming that occupational schemes will be required to provide decumulation services; (ii) deferred small pots, with the government pursuing a multiple default consolidator approach; and (iii) trustee effectiveness, with no immediate proposals for legislation. A call for evidence was published on giving individuals a right to require a new employer to contribute to an existing pension pot – a ‘pot for life’, and on a potentially expanded role for Collective DC (CDC) schemes in future.

Other announcements included that the government is proceeding with legislation to fully abolish the lifetime allowance with effect from 6 April 2024.

ACTION: Review/ask for training on the announcements.

Economic Crime and Corporate Transparency Act (ECCTA) and ban on corporate directors NEW

The ECCTA, setting out reforms intended to prevent criminal use of corporate entities, has been given Royal Assent (read more). Some of these reforms will affect corporate trustees, as well as limited partnerships and Scottish limited partnerships used in certain pension scheme structures.

Alongside the Act, the government has confirmed that it will implement a ban on corporates acting as company directors, although an exception is expected for corporate entities with a ‘legal personality’, where the entity’s directors are, in turn, natural persons (read more).

ACTION: Most measures require secondary legislation and guidance before they come into force. Keep a watching brief on developments.

International data transfers

Schemes that transfer personal data outside the EEA in reliance on standard contractual clauses (SCCs) may need to update their contracts before 21 March 2024. Two new documents replaced the former SCCs and were required to be used for agreements entered into after 21 September 2022. Transitional arrangements in relation to earlier agreements end on 21 March 2024, meaning that such agreements need to be revisited (read more).

ACTION: Make sure any SCCs used by you or your administrator/other third parties are updated.

Dashboards update

The Pensions Regulator (TPR) has published a blog post encouraging schemes to prepare for pensions dashboards and, in particular, to use its dashboards preparation checklist (read more).

ACTION: Continue preparations for pensions dashboards, in line with the guidance.

PLSA guidance on pension sharing charges

The PLSA has revised its guidance on pension sharing orders on divorce, setting out suggested ranges for charges and a flowchart on when charges can be made (read more).

ACTION: Check your pension sharing processes and charges against the guidance.

Guidance on knock-on impacts of public service discrimination (McCloud) remedy

HMRC has published guidance for private sector schemes on potential knock-on impacts of the government’s remedy for age discrimination in public service pension schemes (the McCloud remedy). If an individual is affected by the McCloud remedy and has had a benefit crystallisation event (BCE) in a private sector scheme, this could result in an altered lifetime allowance charge, meaning the BCE may need to be revisited (read more).

ACTION: Ensure administrators are prepared to process queries from any affected members.

Watch this space

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